How Not to Be the Disadvantaged Underdog in this Game

You’re sitting in your study, flipping through the pages of a Wall Street Journal or Investor’s Business Daily, trying to figure out which stocks you should buy.

You have limited capital to invest, limited time for research, and, most challenging of all, a nagging suspicion that, when it comes to stock-picking, you’re bringing that proverbial knife to Wall Street’s gun fight.

Sorry to say, but it’s true… you are the severely disadvantaged underdog in this game we call investing!

But that doesn’t mean you’re destined to lose. Remember, the story of David and Goliath is all about the “little guy’s” triumph.

In case you somehow missed the now cult-classic 2011 film, Moneyball, based on Lewis’ 2003 book bearing the same name, the story chronicles Oakland Athletics’ general manager, Billy Beane, and his unique approach to assembling a winning baseball team.

Beane was a real-life David. He had just $44 million to allocate to players’ salaries in 2002, while other teams were spending north of $125 million.

But what Beane lacked in spending power, he more than made up for with ingenuity.

Essentially, he figured out the “secret” to finding the league’s most valuable, underpriced talent.

This approach was almost unheard of at the time. Yes, baseball is a sport notoriously rife with numerical tallies of players’ performance metrics. But most scouts and coaches weren’t tapping the hidden value in those statistics.

Instead, most scouts stuck to old school, qualitative approaches. They’d simply visit prospects in person and assess the look and feel of their performance. They relied on their experience to guide them through a subjective selection process.

For instance, Beane figured out that two statistics – on-base percentage and slugging percentage – were more predictive of a player’s value than any qualitative assessment of his size, strength, or look.

So Beane focused on those statistics, which everyone else ignored, while other scouts in the league ran around from city to city trying to judge players by eye.

And therein lies the second strength of his approach… Billy Beane prioritized value over vanity.

Most baseball scouts put too much emphasis on how a player looks on the field – they call it the “eye test.” It sounds crazy, but tall, handsome, alpha males got more attention from scouts simply because they looked the part.

That bias toward vanity isn’t unique to baseball scouts or, really, any other competitive sport… it’s rather pervasive in everyday life. Studies have shown that attractive people make more money, on average, than average-looking people. Again, crazy as it sounds… employers are often willing to overpay for people who look the part.

Instead of falling victim to that bias, though, Billy Beane focused on finding the best value. That is, finding players who were likely to contribute the best performance, for the cheapest price.

Those players were often passed over by other scouts, leaving Beane a trove of underpriced, high-potential recruits to choose from.

I hope it’s obvious by now that you, as an investor, can take a page from Billy Beane’s playbook in your quest to, well, “win an unfair game.”

Remember, you’re out-gunned by Wall Street’s massive spending power and research expertise. If you want to win, you’ve got to play Moneyball!

To do that, you’ve got to resist the urge to buy vanity stocks… stocks that everyone’s all hopped up about, just because they’re “hot” and look the part. You’ll never get a winner’s edge piling into Amazon, Google, or Netflix.

Instead, you’ve got to use a proven, evidence-based approach to finding stocks that everyone else is passing over… stocks that have the potential to perform better than the Amazon’s of the world… stocks that are underpriced, simply because they’re overlooked.

All Dent Research services embody the spirit of Billy Beane’s “hard numbers” approach. And John Del Vecchio, our in-house forensic accountant, is all about finding underpriced values that aren’t “handsome” enough to capture the eye of vanity-stock buyers. If he’s got his eye on something, chances are it’s worth looking into.

In fact, next Tuesday he’s going to be doing a special video broadcast that highlights several new profit opportunities that he says are essentially “hidden in plain sight” right before our eyes.

It’s free to attend his special presentation and I’m pretty eager myself to find out what these overlooked stocks actually are. Knowing John, you won’t want to miss it either.

Investing is no longer a set-it-and-forget-it affair. If you’re still using that outdated approach in today’s irrational markets, you’re setting yourself up for massive losses and a difficult retirement. There’s a much… Read More>>

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.